The Influence of Production Planning and Control on Operational Costs in the Manufacturing Industry
Chapter One
Research Objective
The general objective aimed at finding out the relationship between manufacturing planning and control systems and the organizational performance of the manufacturing industry.
The specific objectives of the study were:
- To find out the extent of the implementation of manufacturing planning and control systems by the manufacturing industry in Lagos state.
- To determine the benefits of implementation of manufacturing planning and control systems and find out the challenges faced in implementation in the manufacturing industry in Lagos state.
- To determine the relationship between manufacturing planning and Control adoption and the operational cost of the manufacturing industry in Lagos state.
CHAPTER TWO
LITERATURE REVIEW
Introduction
The chapter highlighted understanding on the various scholars and their findings on the concept of Manufacturing Planning and control, principles and philosophy. The chapter also covered the empirical studies from different scholars on the study topic at hand, the summary of the empirical studies and the conceptual framework.
Theoretical Literature Review
The study was based on The Theory of Constraints and the Systems Theory.
Theory of Constraints
Theory of Constraints (TOC) is a set of principles that maximizes the use of all activities that would cause a bottleneck in the workstations by increasing total process throughput (Collier & Evans, 2006). TOC is a scheduling approach that simply focuses on bottleneck operations (Stevenson, 2013). These bottleneck operations are described by Jacobs, Berry, Whybark and Vollman (2011) as any resource which has the same as or lower than the required demanded capacity. In his book Operations Management, theory and practice, Stevenson (2013) indicates the TOC approach was developed by Eli Goldratt in 1984. Goldratt reasoned that the bottleneck operations limited the output of the system and therefore organizing the non-bottleneck operations in a better schedule would reduce the period when the bottleneck operations were idle (Stevenson, 2013).According to Collier and Evans (2006) constraints limit the production output to their own capacity therefore determining the production output and causing a constraint in the value stream as described by Melton (2005).
A firm with an operating MPC system has the basic database which is used by the TOC, just like with other applications, and implementing TOC as an extension is a logical extension (Jacobs et, al., 2011). According to Chan and Lin (2008) firms using TOC can achieve reduced lead time, improved operations, fall in inventory and increased return on investment. Constraints limit a manufacturing firm from achieving more of its goal as confirmed by Jacobs et. al., (2011) who found out that that by focusing on constraining resources, TOC scheduling provides improved performance to manufacturing firms. The MPC system needs to provide adequate information regarding the flow of materials for an efficient process. The Theory of Constraints was used in the study as it helps in identifying where constraints could arise and give an insight on how to manage them.
Systems Theory
A system, according to Collier and Evans (2006) is a related group of components that work together to accomplish a task. (Stevenson, 2013) states that the systems approach’s main theme is that the whole system consists of different individual parts but the main emphasize is on the interrelationship among its subsystems. This same argument is supported by Bellgran and Safsten (2010) who argue that how different components relate and interplay in a system is what is referred to systems theory. According to Yourdon (1989) various systems are distinguished from the environment through what the system is used for and what comes out of it. The argument for the theory is that an organizations performance is shaped by internal and external factors and to understand it a holistic perspective of systems theory has to be understood.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This section looked into research design, target population, data collection and data analysis techniques.
Research Design
The study used descriptive design. Descriptive studies answer questions of what, who, when, where and how topics are used (Cooper & Schindler (2006). According to Ghauri and Gronhaug (2005) the problem is structured and well understood in descriptive design, and confirmed by Mugenda and Mugenda (2008) who agree that a clear picture of how situations really are is received through a descriptive report research design. The descriptive design assisted in determining the relationship between manufacturing planning and control and the operational cost of pharmaceutical manufacturing firms in Lagos state.
Population
In this study, all the 28 registered pharmaceutical manufacturing firms in Lagos state were targeted as the population, as provided by Nigeria Association of Manufacturers (KAM, 2016).Appendix 11. According to Sekaran (2005) a group of individuals, objects or items from which samples can be taken for measurement, or elements with at least one thing in common is referred to as population. The number of registered firms is small and therefore a census survey was used.
CHAPTER FOUR
RESEARCH FINDINGS AND DISCUSSIONS
Introduction
This chapter presents the findings of the study based on its objectives. It begins with the presentation of the response rate and the demographic information of the respondents interviewed.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
The purpose of this study was to find out the relationship between manufacturing planning and control systems and the organizational performance of the manufacturing industry. The previous chapter presented the findings and discussion of the study findings. This chapter therefore presents the summary of the study findings, conclusions and the study recommendations.
Summary of Findings
The study found that different aspects of manufacturing planning control were adopted and implemented by the organizations studied. Material requirement planning system was adopted and implemented by the organizations studied to a large extent (Average mean 3.83). Manufacturing resource planning system was adopted and implemented by the organizations to a greater extent (Average mean 4.05). It was also found that enterprise resource planning was adopted and implanted by the organizations studied to a great extent (Average mean 3.97) and that Just-In-Time was adopted and implemented by the organizations studied to a great extent (Average mean 3.88).
The study found that the benefits of the implementation of manufacturing planning control systems included: reduction in cases of stock outs (Mean 4.13) and easy monitoring of processes from all departments (Mean 4.05) among others. On the other hand, some of the challenges facing the adoption and implementation of manufacturing planning control in the organizations studied included: communication barrier between parties such as departments, insufficient utilization of labour, resistance to change from traditional methods of doing things, seasonal/unstable market for commodities, lack of qualified personnel, inadequate resources, prolonged decision making processes, untimely delivery of raw materials, unreliability of suppliers of materials leading to holding buffer stock resulting to high working capital requirement.
Finally, on the relationship between manufacturing planning and Control adoption and the operational cost of the manufacturing industry, the findings from correlation analysis showed that operation performance was positively associated with material requirements planning with r = 0.387 and p value of 0.000, an indication that it is statistically significant with p value less than 0.05 ( < 0.05). There was also a positive correlation between Operation performance and manufacturing resource planning with r = 0.547 and a p value of 0.000 (statistically significant). It was further found that operation performance had a positive relationship with enterprise resource planning with r = 0.131 and p value of 0.000. The correlation findings finally revealed that operation performance had a positive relationship with Just-In-Time with r =0.086 and p value of 0.000. The findings from regression analysis revealed that 70.9% of the variations on operation performance can be explained by material requirement planning, manufacturing resource planning, enterprise resource planning and just in time. The remaining 29.1% can be explained by other variables which were not studied. This was an indication that the variables studied were strong predictors of operation performance with the organizations studied.
Conclusions
Based on the findings of the study, the following conclusions were made: That the organizations studied have adopted and implemented manufacturing planning controls systems to a great extent (Mean 3.93) .
The study also concludes that the organization have benefited from the adoption and implementation of manufacturing planning control systems by reducing cases of running out of stock and by making it easy to monitor of proceses from its departments.
It can also be concluded that communication barrier, insufficient utilization of labour, resistance to change, seasonal/unstable market for commodities, lack of qualified personnel, inadequate resources, prolonged decision making processes, untimely delivery of raw materials and unreliability of suppliers of materials were among the challenges facing the adoption and implementation of mmanufacturing planning control in the organizations studied.
The study finally concluded that there was a strong relation between the variables studied such as material requirement planning, manufacturing resource planning, enterprise resource planning and just in time and operation performance as they explained up 70.9% of the relationship.
Recommendations of the Study
The following recommendations were made based on the study findings. The manufacturing industry should put more effort in adopting and implementing aspects such as material requirement planning, enterprise resource planning and just in time which needs more to be done.
The study also recommends the manufacturing industry should come up with other strategies of countering the challenges facing adoption and implementation of manufacturing planning and control systems. Specifically, the organizations should improve on communication within and across its departments and adopt change.
Limitations of the Study
The study covered the 28 pharmaceutical manufacturing registered firms in Lagos state which are in different locations. Due to the constraint of time, the researcher had to work extra hard in following up on the respondents through phone calls and emails. Getting time off duty to do a personal follow up was a big hindrance and this is the reason why not all questionnaires delivered to the respondents were delivered back. The researcher had to try and balance the work situation with beating the deadline for submission which in itself was not easy. Given enough data collection period, the researcher believes more data would have been collected.
Suggestions for Further Research
This study sought to finding out the relationship between manufacturing planning and control systems and the organizational performance of the manufacturing industry.
It is therefore recommended that another study be done specifically on the challenges facing the adoption and implementation of manufacturing panning and controls systems in organizations which was not the main focus of this study. This study was done on the impact of manufacturing planning and control systems on the manufacturing industry in Lagos state, the same study can be done for the same industry for the whole country and better still for another country.
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